Which of the Following Is the Proper Accounting Treatment for Purchased

question 29

Multiple Choice

Which of the following is the proper accounting treatment for purchased goodwill?

• A)Goodwill must be expensed when acquired.
• B)Goodwill must be capitalised when acquired and amortised over 70 years or less.
• C)Goodwill must be capitalised when acquired and amortised over 20 years or less.
• D)Goodwill must be capitalised when acquired and expensed each year to the extent that the value has declined.

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Definitions:

Market Structures

The organizational and other characteristics of a market, including the number and size of firms, extent of competition, and type of product differentiation, impacting the behaviour and profitability of businesses within the market.

Quantity Effect

The change in total revenue resulting from a unit change in quantity sold, while holding price constant.

Price Effect

Describes how changes in prices impact the quantity supplied and demanded in a market.

Downward-Sloping Demand

A market condition reflected in a demand curve where the quantity demanded of a good decreases as the price of that good increases, and vice versa.